The man who piloted the billion dollar technology initiative that has given
Commonwealth Bank of Australia
a digital lead over its big four rivals says he is leaving in order to affect a similar turnaround at embattled Barclays Bank as it seeks to recover from scandal and job losses.

Outgoing CBA tech chief
Michael Harte
said the decision to end his tenure at the bank was his, and that it had been taken partly because of CBA’s huge advantage over local rivals.

Speaking exclusively to The Australian Financial Review following the announcement of his departure to take control of operations and technology at Barclays Bank in London, Mr Harte said he believed he has “five years left in the tank," and that he could help turn around negative public sentiment towards the post-GFC British banking sector.

He was been approached by Barclays a couple of times in recent years, but said the time was now right to make the move from the perspective of both institutions.

Mr Harte said he would likely remain at CBA until late August to manage a ­transition to his successor as group executive of enterprise services and chief information officer.

He said early work was under way to identify the bank’s new tech leader from within its ranks.

He will undoubtedly leave large shoes to fill at CBA. Often described as ­Australia’s only celebrity CIO, his tenure has seen the bank reinvent itself as a technology leader.

Mr Harte’s team completed a mammoth $1.5 billion program to replace the bank’s ageing technology systems in late 2012, and has been responsible for numerous innovative products in the emerging mobile payments space.

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Internal candidates

However, Mr Harte said an internal training regime developed in conjunction with the Massachusetts Institute of Technology, allied to experience working on a series of innovative projects, meant there was a number of internal candidates for his role, who would be superior to anyone that could be turned up by a global search.

Last Friday the Financial Review’s Street Talk column named retail and wealth chief information officer Pete Steel and technology and operations executive general manager Keith Hunter as leading candidates, but Mr Harte said it was still too early to make any decisions.

“When I came here I looked at the talent in Australia and the investment in MIT was deliberate to grow functional managers into being strategic leaders.

“Now we have invented hundreds of people here that are world class and who will all be targeted by big and exciting companies from around the world.

“The calibre is here, we don’t need to look elsewhere. We could put three or four different people in this role and they would do admirably . . . they will actually do a better job than me because they won’t have to learn as much. I had to learn a whole lot."

Mr Harte said the internal hunt was still in its infancy because, despite alerting chief executive
Ian Narev
to the possibility of him leaving before Easter, the decision was not final until last Tuesday morning.

Between then and the official announcement of his departure last Thursday, there was a flurry of activity between London and Sydney to ensure that both CBA and Barclays chief executives and chairmen were across the details of the move.

“Then we had to figure out how to explain it because as soon as you tell someone something like that they always yak about it, and we needed to be respectful to the teams of people that are impacted by the change."

Value for communities

Mr Harte said it had become more important for him to focus on the value created for communities by banking.

He said improved technology meant banks could understand customers immeasurably better than had ever been possible in the past. Barclays is undergoing a large redundancy program as it moves on a transformation program aimed at focusing on traditional customer-centric banking, following a savaging by regulators and alleged manipulation of the London Interbank Offered Rate.

“The next five- to eight- year mission would be to turn the sentiment around. To work proactively and constructively with regulators to ensure that the products and services we are creating for customers are appropriate for their needs, and I think we can turn that sentiment around," Mr Harte said.

“Everyone has a role to play to better understand how banks prosper, and why that is virtuous and not evil. There is a lot of virtue and technology can make that accessible to more people."

One of Barclays’ biggest assets is its Barclaycard business, and Mr Harte said its large presence across Africa was a major draw for him.

He said he intends to make extensive visits to Africa to learn how payment services, like Kenya’s M-PESA mobile wallet could redefine banking in Western markets.

“All this innovation that has come up around mobile payments is actually coming out of Africa and is informing the UK banks how to treat their customers.

“The beautiful thing is that the less developed nations have now leapfrogged the old world with customer centred technologies in mobile payments and banking.

“This is a bit like New Zealanders teaching everyone else how to play rugby and make nice wine. It is the new world teaching the old world something they invented."

Master of spin

Mr Harte said it was never likely that he would have left CBA for a job in a rival Australian bank, joking that none of them would have him.

His tenure has seen numerous articles suggesting that CBA’s tech advances have left rivals in the shade.

This has often been vehemently refuted by his peers in rival banks, who intimate that Mr Harte has simply been a master of public relations.

He inherited a big advantage with the bank’s real-time CommSee customer platform, and Mr Harte said that the bank’s subsequent commitment to updating its 45-year-old systems should not be viewed in terms of his own personal legacy.

The scale of the project was unprecedented in Australian corporate technology circles, with 1500 people working full-time on the initiative for six years.

“Modernisation wasn’t my idea it was Ralph [Norris]’s idea and [former CBA tech exec] Dave Curran’s idea. We had to work together to get the board to invest in it, take the risk and have the patience to stay the course even though it was taking longer and costing way more than we hoped it would," Mr Harte said.

“The tech lead that we have is not mine, it is 6000 IT and operations staff and they are in the service of 50,000 people that work here."

The speed CBA got new tech products to market was one of the key advantages it had over its rivals, he said.

This was highlighted last week when the bank announced a new service to allow customers to withdraw cash from ATMs via smartphone, beating a frustrated Westpac to the punch, which rushed out a similar announcement later in the day for a service which will arrive in the future.

Real time advantage

Mr Harte said it was gratifying that the cardless cash initiative had come from an idea from a CBA enterprise services employee, Juliette Lay, who had helped push the initiative through in only a few months.

“She could do that because we have rapid cycle development on top of the real time platform now," he said.

“If we had built that use case up in the past it would have taken us six months to develop the idea and the business case and six months to put it in trial and then another six months to launch it.

“We have this real time advantage with the new platform . . . nobody can touch us."

While he said he was leaving CBA behind, Mr Harte flagged plans to try to set up a program where Barclays and CBA could work together on future ideas.

“I really love these people and will miss them a lot and hopefully they will ­tolerate some form of co-innovation where both banks – where we don’t compete – can collaborate, and I can learn from the smart innovative people here, and introduce some of that back into Barclays," he said.

Mr Harte said he had received a stream of largely positive messages from ­contacts within the industry since news of his departure was announced, ­however others have suggested that there are plenty within the IT vendor community who will be happy to see him go.

CBA teamed up with the likes of Bank of America and Deutsche Bank to pressure suppliers, which have since reluctantly adopted cloud delivery.

Pioneer for consumption

IBRS analyst Dr Kevin McIsaac said Mr Harte had been a pioneer for a new way of business technology ­consumption.

“Michael Harte is one of Australia’s most astute cloud visionaries and has turned CBA into a lighthouse that other companies should use for guidance," Dr McIsaac said.

“Michael has inverted the standard IT infrastructure cost ratio from 75 per cent of IT budget to just 25 per cent, enabling CBA to spend far more on innovation.

“This is an important IT cost metric that other organisations must try to emulate if they wish to remain competitive."

Mr Harte said he would continue to adopt a similarly tough stance towards tech vendors at Barclays.

“It is a small world and my pressure on software and hardware companies has been evenly spread.

“All I ever asked them to do was ­provide me their products as a service, on subscription, across a network from a cloud that was secure and that I could switch in and out of it if it was too ­expensive or the service didn’t work," Mr Harte said.

“Many of them didn’t like it because they had these long term contracts and lock-ins with annuity incomes that they could get complacent about.

“I wish all the companies that are moving to an as-a-service model all the best, and I will continue to buy their services in my new role.

“For those that are still reluctant to go in cloud-like directions then I hope they finally see the light," he said.